Buyers in trouble because of Delhi govt’s land pooling ‘jung’ with LG

A standoff between the Delhi government and the lieutenant governor over circle rates has led to impounding of sale deeds of some land buyers who had hoped to cash in on the land pooling policy(ISTOCK)

Dozens of investors who bought agriculture land four to five months ago from farmers in the land pooling zones of north, northwest and southwest Delhi are desperately struggling to get their land titles. The reason? A standoff between the Delhi government and the lieutenant governor (LG) Najeeb Jung.

Sub-registrars are impounding sale deeds in which the land rates declared are lower than the circle rates fixed by the Delhi government on August 4, 2015. According to sources in the revenue department, the collector of stamps, the designated authority to clear these impounded documents, has been unable to deal with the papers because of differences between the Delhi government and the LG on fixing land rates of agricultural land in the land pooling zones of Delhi. Notification related to hike in circle rates of agricultural land is under judicial scrutiny in the Delhi High Court.

Ramesh Singh (named changed) had bought seven acres in northwest zone in Delhi, where the circle rate was Rs 3 crore per acre at actual market rates of Rs 1.5 crore per acre. “I got the land registered at Rs 1.5 crore but the sub-registrar impounded my documents after registration and sent them to the collector of stamps or the sub divisional magistrate (SDM) of that area. A number of months have gone by, but he has yet to clear the documents,” says Singh.

“Recently one of the sub-registrars from the northwest district of Delhi sent 40 sale deeds of agriculture land to the collector of stamps for fixing the right value of the property,” says source in the revenue department on conditions of anonymity.

In the normal course of things, whenever a buyer undervalues property, the sub-registrar impounds the title deed after registering it at the value quoted by the buyer and sends it under Section 47A of the Indian Stamp Act to the collector of stamps. The collector then determines the right value within 25 days and works out the differential sum and the sub-registrar charges the buyer the remaining sum to complete the registration process.

Things went wrong on August 4, 2015, when the revenue department of the Delhi government issued a notification raising the circle rate of agriculture land of Delhi from Rs 53 lakh per acre all across Delhi to Rs 1 crore-to Rs 3.5 crore per acre depending on the different market rates in different areas in Delhi. Just a week after that, on August 10, 2015 LG Najeeb Jung stayed this notification for further examination. During the Delhi government-LG standoff Congress leader Naresh Kumar filed a public interest litigation demanding interim stay on the notification issued by the Delhi government. Refusing the stay, the high court agreed to hear the matter.

Now, even though the matter is pending in the Delhi High Court, sub-registrars, especially those in the land pooling zones, are registering land at rates over and above R53 lakh per acre.

“Purchasers who are paying stamp duty at the rate fixed by the Delhi government in its August 4, 2015, notification, are getting their sale deeds registered without problems. However, those wanting to pay according to old rate of R53 lakh per acre find that the sub-registrar, after registering the sale-deed, is confiscating the document and sending it to the collector of stamps, or SDM. The SDM does not clear the file because he is waiting for the final judgment in the Delhi High Court. So despite paying the money for the land, buyers are kept waiting for the title for several months. They are very worried about the standoff continuing for a long time,” says a source at the Kapashera sub-registrars’ office.

Senior officials in the revenue department admit to lack of clarity on the stamp duty charged from land buyers. “What if tomorrow the Delhi High Court sets aside the August 4, 2015, notification of the Delhi government? If this happens then the government can be accused of overcharging land buyers. And in case the court upholds it, then the revenue officer will have to follow the cumbersome process of issuing a notice and recovering the remaining stamp duty,” informs another revenue official.

Why are circle rates higher in land pooling zones?

Some property brokers say that the hike in circle rate is highly unrealistic in certain areas because over a period of time the land rates have fallen due to lack of clarity on the land pooling policy (LPP). They also allege that when the government was not taking any final decision on LPP, why had it fixed two different rates for agricultural land for two areas – non LPP and LPP.

According to the government notification of August 4, 2015, in northwest Delhi, the circle rate of agriculture land in non LPP zone is R1.25 crore per acre while in LPP zone it is R3 crore per acre.

“It shows that Delhi government wants to kill the whole policy. The whole logic behind higher circle rate of LPP area was that the demand of agriculture land would be high due to attractive LPP. Now on that presumption the Delhi government has hiked the circles rate but put the whole policy in cold storage,” says Amit Jain, an investor in the L zone.

Jain adds, “Not only that, in many areas the market price is much less than the circle rate. For instance, in north Delhi, along the GT Road, the market price of agriculture land varies between R2.5 crore to R3 crore per acre, which is pretty close to the circle rate of R3 crore per acre. However, once you go into the interior areas the price keeps falling and at some places is as low as R1.25 crore per acre. It’s very strange that I purchase land at the market price of R.1.25 cr per acre but my stamp duty will be calculated at R3 crore per acre.”

Investors also allege that this unrealistic hike in circle rates has encouraged corruption in the revenue department. “Take the case of an investor is purchasing land at the rate of 1.25 crore per acre. Even if he pays stamp duty on the basis of the prevailing circle rate, ie, R3 crore per acre, the sub-registrar can threaten to report the matter to the income tax department for undervaluation of property and extort money from him. Many investors are not aware that details of all sale-deeds are sent to the income tax department as routine practice,” alleges one of the investor, claiming to have paid R50,000 to a sub-registrar for not reporting the matter to the IT department.

He adds, “Buyers are not aware of a lot of practices and rules of the revenue department which sub-registrars often take advantage of. For instance, if a purchaser is paying stamp duty according to the circle rate but the price of the property quoted by him is lower than the circle rate, the sub-registrar can’t confiscate the sale deed. Many sub-registrars, in collusion with deed-writers, are threating buyers that they will confiscate the documents because the property is undervalued.”